Chapter 4


Cash is both an investment class in its own right, and of course the means of exchange that is used to pay for investments in the other asset classes such as securities and derivatives.


Cash is used to pay and receive funds as a result of trading in other instruments. In this context cash is a currency such as pounds sterling, United States dollars, Japanese yen, etc. Currencies are usually identified by a three character ISO currency code such as GBP, USD and JPY. Cash is held at bank accounts, and the location of these accounts is generally, but not exclusively, in the country that uses that particular currency as its own official currency. There are exceptions to this rule, for example all European Union countries offer bank accounts in euros, even if, like the United Kingdom, the euro is not the official currency of the country concerned.

The relationship between countries and currencies is a many (country) to one (currency) relationship. Even before the advent of the euro in 1999 there were examples (such as Panama which uses the United States dollar) of one country using the official currency of another country as its official currency.

For each currency there are associated working days and holiday calendars. Nearly all currencies use Monday to Friday as normal working days, and banks are closed at weekends. There are exceptions to this rule – some Islamic countries close their banks on Fridays and open them on Sundays.

Each ...

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